Correlation Between Grong Sparebank and Instabank ASA

Can any of the company-specific risk be diversified away by investing in both Grong Sparebank and Instabank ASA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Grong Sparebank and Instabank ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grong Sparebank and Instabank ASA, you can compare the effects of market volatilities on Grong Sparebank and Instabank ASA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Grong Sparebank with a short position of Instabank ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grong Sparebank and Instabank ASA.

Diversification Opportunities for Grong Sparebank and Instabank ASA

0.4

Correlation Coefficient

Grong Sparebank  Instabank ASA

Very weak diversification

The 3 months correlation between Grong and Instabank is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Grong Sparebank and Instabank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instabank ASA and Grong Sparebank is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Grong Sparebank are associated (or correlated) with Instabank ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instabank ASA has no effect on the direction of Grong Sparebank i.e., Grong Sparebank and Instabank ASA go up and down completely randomly.

Pair Corralation between Grong Sparebank and Instabank ASA

Assuming the 90 days trading horizon Grong Sparebank is expected to generate 1.72 times less return on investment than Instabank ASA. But when comparing it to its historical volatility, Grong Sparebank is 1.2 times less risky than Instabank ASA. It trades about 0.02 of its potential returns per unit of risk. Instabank ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  192.00  in Instabank ASA on September 25, 2024 and sell it today you would earn a total of  5.00  from holding Instabank ASA or generate 2.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Grong Sparebank  vs.  Instabank ASA

Grong Sparebank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grong Sparebank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Grong Sparebank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Instabank ASA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Instabank ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Instabank ASA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Grong Sparebank and Instabank ASA

The main advantage of trading using opposite Grong Sparebank and Instabank ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grong Sparebank position performs unexpectedly, Instabank ASA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Instabank ASA will offset losses from the drop in Instabank ASA's long position.

The idea behind Grong Sparebank and Instabank ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.